Cujo,
Re: They were going to appraise Echidna, but lately they are of the idea to just pump it.
That sounds a bit random and these guys do not do random decisions...
What actually happened was:
The appraisal wells had been part of the Licence commitment on the remaining unexplored acreage on the 5 Santos Licences, nothing to do with the Echidna and Kangaroo discoveries, on which Karoon have "terabytes" of data, including flow rates on both Echidna-1 of 4,650 Barrels of Oil per day and Kangaroo-2 of 3,700 Barrels of Oil per day. When drilled they owned 65%, now they own 100% of both of these discoveries, after buying out their bankrupt partner, Pacific Rubiales' 35%.
So this does three things:
(1) removes a $359 million (Gross 100%) estimated capital requirement for KAR and the future farmout partner - so deal is easier/cleaner to sell
(2) means they can get the oil out sooner by drilling two Horizontal production wells (estimated to flow at 14,000 BOPD each) and a Gas Injector well, instead of more exploration seismic and drilling up other exploratory wells on non discovery acreage.
(3) means that PricewaterhouseCoopers (their auditors) will be pleased that their worldwide capital commitments are cut buy 49.7%
Per Karoon 31/12/2017 Financial Statements
Note 9 (b) Variation of Existing Brazilian Work Program
During February 2018, the ANP approved Karoon’s application to review the Appraisal Plan for Santos Basin exploration
Blocks S-M-1037, S-M-1101, S-M-1102, S-M-1165 and S-M-1166 thereby removing the appraisal phase firm
commitments to drill two wells and acquire 3D seismic and drilling up to four contingent wells, in favour of progressing
Echidna and Kangaroo oil discoveries to a future development and resolved to close the current Appraisal period.
Karoon will now present the Final Appraisal Report and submit a Declaration of Commerciality application on the areas
it intends to retain to progress a future development.
The removal of the appraisal plan minimum work commitments reduces the Exploration Expenditure Commitments as disclosed in Note 8(b) by $359 million.
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